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Circuit City Axes Their Best Employees

The word on the street is that Circuit City is in trouble.  Their stock is off 77% since February.   Also, they are laying off some of their most experienced workers.  From  App.com:

Customers abandoned Circuit City for Best Buy Co. after Chief Executive Officer Phil Schoonover eliminated 10 percent of the most-experienced U.S. workers this year and replaced them with people willing to work for less. Sales in stores open at least 12 months fell 5.6 percent in the third quarter, compared with a gain for Best Buy.

Why Facebook is like the Real Estate Dilemma

I was just reading "Fred Wilson: Facebook's Worth $5- $7 Billion" over on Silicon Alley Insider and thought I'd come up with something witty to say in response, but I imagine that Fred Wilson knows more than I.

However, what I do know is that Zuckerberg is probably thinking in his own mind that Facebook is now worth perhaps $16b, $17b, ..., $20b.  He's like a homeowner who thinks their $175k house is worth $275k.

People like me think that Facebook is worth $1b, if that.  The kids who use Facebook aren't there to click on ads.  Rather, it's basically a gossip site (and a few other things like posting pics of drunk people at parties or about guys who skip work and dress up a fairies at a party and later get fired for this).  In any case, they're not there to consume or click on ads.  They are college kids and (perhaps) they get their college paid for.  Thus, Facebook has a low CPM and at best might be worth $1b.

The only reason one could argue they are valued more is ad deals that really don't make much sense.  I agree with Wilson that Microsoft overpaid for their micro-investment in Facebook though.

Cash Détente: GOOG, AAPL, EBAY, MSFT and YHOO

Something just came to me when I saw that Apple (AAPL) has $9.2B cash on hand.  The marquee tech companies have so much cash these days that each has the potential to cross over directly to a rival's turf.  However, the rival has so much cash on hand that they could easily quell these aggressive moves.  The process reminds me of détente (Wikipedia link), meaning that the cash reserves each company has keeps the other from expanding away from their core focus.

• Google (GOOG) has $9.8B cash on hand
• Microsoft (MSFT) has $31.1B cash presently
• Yahoo (YHOO) has $2.7B cash
• eBay (EBAY) has $3.4B cash

Along with some other tech companies, these cash reserves amount to about $60B.  Of course, some of this is earmarked for stock options and retirement programs, but what's left over is certainly huge.

Chances are these companies will be relucant to take on a risky cash-based merger, although eBay did spring for Skype.  Rather, these companies would be more likely to use the cash to finance their own internal growth.  Buyouts will still happen, but they will be more likely to be of the $25M variety than a multi-billion dollar deal.